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Rise of the Global Tax Collectors

The Constitution gives Congress the exclusive right to tax
Americans at the federal level. Yet Congress continues to give away
this most fundamental responsibility to international
organizations, the most dangerous of which is the Paris-based
Organization for Economic Cooperation and Development (OECD).

Most Americans probably would not approve of their tax dollars
being used to support an international organization that undermines
their fundamental liberties and promotes giving their hard-earned
money to other governments, often run by corrupt or dictatorial
regimes. This is precisely what the OECD is doing, with the
blessing of the majority members of Congress.

The OECD has just released a report bragging about its
“progress” in getting countries to engage in automatic
sharing of tax information. The report states: “The automatic
exchange of information involves the systematic and periodic
transmission of ‘bulk’ taxpayer information by the
source country to the residence country concerning various
categories of income (e.g., dividends, interest, royalties,
salaries and pensions).” The Obama administration is actively
supporting this effort.

This means that the most vile governments will receive financial
account information automatically about individuals from other
countries. Assume you are standing up to or protesting some corrupt
or authoritarian regime in your own country — there are too
many to name — and to protect your family, you have a bank
account in the United States, Switzerland or some other nation that
offers basic protections of civil liberties. Under automatic
information-sharing, the thugs you are opposing will be receiving
information about your finances from the U.S. government and other
governments, which can put your property and your life at risk. The
response from the bureaucrats in the OECD and Obama administration
is “we protect confidential information,” as if they
had never heard of Wiki-Leaks or the other never-ending hacks of
government data. Again, we are told that governments will
increasingly engage in “automatic” information-sharing
and will “protect confidential information,” but please
don’t notice the disconnect. Most people view their tax
returns and bank account information as “confidential.”
Would you voluntarily risk your life on the unenforceable promise
of someone in government not to lose, misplace, sell or leak your
financial information?

The OECD was formed in 1960 to promote trade and investment
among the developed countries. Over the years, it has morphed into
an organization promoting higher taxes and the redistribution of
income as Andrew P. Morriss and Lotta Moberg have described in an
excellent analysis, “Cartelizing Taxes: Understanding the
OECD’s Campaign Against Harmful Tax Competition,”
published by the Social Science Research Network.

Earlier this year, the OECD published a report claiming that the
poverty rate is higher in the United States than in countries such
as Greece, Portugal and Turkey. To reach this absurd conclusion,
the OECD redefined poverty as a relative measure of cash income
(not real income, which includes transfer payments). Under the new
OECD definition of poverty, if real incomes were twice as high as
they are today in the United States — meaning the poorest 10
percent could purchase double the amount of food, housing, etc.,
the U.S. poverty rate still would not fall, because income
distribution would stay the same.

Dan Mitchell, a senior fellow at the Cato Institute and
well-known tax economist, has closely followed the efforts of the
OECD in promoting bigger government and more statism. In his
extensive work, he has described how the OECD’s
“anti-tax competition project” is designed to prop up
Europe’s bankrupt welfare states and how its advocacy of
“higher marginal tax rates,” a “value-added
tax” and “failed Keynesian stimulus” for the U.S.
reduces economic growth. (Note: OECD bureaucrats work out of plush
offices in Paris, travel first class and have
tax-freesalaries.) It is worth repeating: U.S. taxpayers
are supporting high-salaried international bureaucrats who are
advocating higher taxes on others, most notably U.S. taxpayers, but
do not pay income taxes themselves. Hypocrisy abounds.

The real scandal is that U.S. taxpayers are being forced to fund
much of the OECD’s efforts to oppose tax competition, promote
higher tax rates and work against financial privacy and economic
growth because Congress continues to authorize funding for these
activities. The OECD budget is about $400 million per year, with
the U.S. picking up the biggest share (22 percent). So why do even
many Republicans and self-proclaimed conservative members of
Congress continue to vote for OECD appropriations? Some members of
Congress and their staffs are just plain ignorant about the real
OECD activities, much like they were of ACORN’s. The
bureaucrats at the State and Treasury departments, along with their
congressional allies, are clever in hiding OECD appropriations in
bigger funding bills with nice-sounding titles, in part because it
means taxpayer-funded trips to Paris with fine dining.

Nevertheless, serious and fiscally responsible members of
Congress have the ability to knock all or part of the OECD funding
out of the budget through amendments, provided they can get a
majority of their fellow members to vote with them. The major
limited-government, free-market organizations have endorsed a
cutback in OECD funding. This year, organizations such as the
Center for Freedom and Prosperity will monitor and report on who
doesn’t vote for cutting back on the OECD. Will Congress take
note, particularly those members who signed the pledge not to
increase taxes?